Time and Material Software Outsourcing: How Does That Pricing Model Work?

Time & Material is a contract based on the actual hours worked.This is a very flexible approach where you decide what is the most important for your project and what should be implemented first.

After you share the details of your project with us, we can create a preliminary estimate which will tell you the approximate cost and development duration of the project. Keep in mind that the more specific you are in describing the project, the more precise our quote will be. If you desire so, we can sign a Non-Disclosure Agreement (NDA) with you before you tell us any important information.

After you receive the estimate, we can move on and sign the contract. This is a standard agreement, which covers all of the law aspects and even includes NDA statements in it. You only have to sign it once for the project, all following actions will only require one-page additional specifications. The contract also includes the price for the Vision & Scope document in it.

Vision & Scope (V&S)

Vision & Scope is a general description of the Projects structure, main features, and requirements for it. It gives a good understanding of the project, presents a better understanding of the project's length and cost, and allows to plan the iterations of development.

To develop a Vision & Scope document includes two Skype meetings with our Project Manager who collects the information and prepares the V&S in one working week.

The fee for Vision & Scope is a deposit that is later accounted as part of your project’s cost.

Let's start the actual development work!

Next step is we plan features' development. It might seem that flexibility would take care of this step, but careful planning still saves a whole lot of money.

One development time period (called sprint or iteration) typically lasts 2 weeks. There are times when the project is a small one and the sprints are 1 week long, but usually, there's little that can be done in a span of one week (when we're talking about full feature development from scratch).

At the beginning of each iteration, the team holds a planning session to break down each of the features scheduled for the iteration into specific technical tasks. After the sprint is completed, the team sits down again for "retrospective" to review how did they do and how the process can be improved for higher efficiency in the future.

When should you opt for Time & Material outsourcing?

When you’d like flexibility in the project scope to meet changing requirements

If you are planning on continuously developing the project, enhancing it and adding more features according to the user preferences (you might also consider getting a dedicated team for this goal)

If you want to monitor and manage the project in detail (i.e. reviewing detailed project timesheets to validate the service hours provided)

When you want simplicity regarding project documentation pertaining to project changes (i.e. not needing to create as many Change Order documents if new project tasks are requested)

Still debating? Check out our post where we compare Fixed Price, Time&Material, and Dedicated Team models.

Author: Grossum Possum

Grossum Possum. He loves using Symfony2 for his projects and learning to implement Symfony3. He also likes developing web and mobile applications using other programming languages and frameworks, such as PHP and Java. In his free time, Grossum Possum likes to write about his experiences in the blog.